Reliance Communications-Aircel merger: NCLT to decide on August 10

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Mumbai | Updated: August 4, 2017 7:25:32 AM

The Mumbai bench of the National Company Law Tribunal (NCLT) will decide on August 10 if the merger petition of Reliance Communications (RCom) and Aircel can be admitted without RCom calling a meeting of its creditors.

RCom had told the court last month that it does not intend to call a meeting of creditors as they believe it was not necessary.

The Mumbai bench of the National Company Law Tribunal (NCLT) will decide on August 10 if the merger petition of Reliance Communications (RCom) and Aircel can be admitted without RCom calling a meeting of its creditors. After hearing the arguments of RCom, Aircel, Chennai Network Infrastructure (CNIL), Ericsson and Indus Towers — the last three being objectors to the merger — a two-judge bench said it would pronounce an order next week. Ravi Kadam, appearing for CNIL, submitted that under the Companies Act, 2013, it is mandatory to call for a creditors’ meeting so that their objections could be considered. RCom had told the court last month that it does not intend to call a meeting of creditors as they believe it was not necessary.

Kadam added that according to CNIL’s original agreement with Aircel, its dues should be paid in the event of a change in ownership of Aircel. “We have accelerated our dues — originally payable till 2025 — to Rs 1,532 crore as RCom will hold 50% in the joint venture with Aircel, therefore changing the ownership,” he explained. According to the merger terms, both RCom and Aircel’s controlling firm Maxis Communications will hold equal stakes of 50% each.

Aircel’s counsel Navroz Seervai countered the claim amount saying the dues were not more than Rs 60 crore as on March, 2017. Seervai added since CNIL made an erroneous claim, the objection was not bona fide. Meanwhile, appearing for RCom, Janak Dwarkadas informed the court that at a meeting held on July 7, a joint lenders’ forum (JLF) had not objected to the merger petition being admitted by the NCLT. “If the scheme of merger is not sanctioned by November, the loan will turn non-performing and might lead to the liquidation of the company,” he said.

It may be recalled that a clutch of creditors (secured and unsecured) have objected to the sale and merger alleging that a meeting of creditors was not convened by RCom and their approval was not sought. On its part, RCom had cited a Mumbai NCLT order dated March 15 and said the court had granted it some dispensation, to which the objectors said the order was misinterpreted by RCom. RCom has received the approval for the merger from the Securities and Exchange Board of India and is awaiting a nod from the NCLT.

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